MRO Spending Picks Up For Older Widebodies

Widebody airframe maintenance specialists should see steady demand for their services for at least the next three years, as increased heavy maintenance visits (HMV) somewhat offset a predicted decline in less intensive C check activity for the period.

“We are seeing a pick-up in spending on MRO for the older widebodies, which are now approaching a period of refurbishments and modifications, along with regularly scheduled maintenance,” says Wayne Plucker, aerospace industry manager for Frost & Sullivan. “For both the North American and European MROs, the MRO market will be focused on an aging widebody fleet.”

Unlike narrowbodies, MRO capacity could become an issue. “There isn't the excess capacity that you have with narrowbodies, especially for the 747s and A380s, so scheduling is going to become an issue. For the A330 and 777, MRO capacity is getting especially tight in the Asia-Pacific region,” he says.

Jonathan Berger, VP MRO Practice for ICF SH&E, believes the widebody MRO capacity shortage already exists. This “is giving leverage to the suppliers, in that the airlines have to reserve slots over a longer time horizon than in the past,” he says. “The widebody airframe MROs are running at about 90% capacity. Slots, which were readily available just a few years ago, are not, especially if you want to book a line of multiple aircraft.”

Berger thinks that Aveos's abrupt closure in Canada and American Airlines' decision to outsource its widebody aircraft absorbed a lot of formerly excess capacity.

Aviation Week Intelligence Network data indicate that widebody heavy maintenance providers are likely to see the highest demand for the Airbus A330 and Boeing 767 and 777 over the next three years. Those families represent the top largest widebody fleets in service, with about 900 777s operating, followed by the A330 with more than 800, and nearly 700 flying 767s. These aircraft hold the top three positions in terms of HMVs, with some variations in rank, by number of visits.

Looking at the entire in-service widebody fleet, the number of HMVs will average about 500 over each of the next three years.

The 767 also appears in the top three through 2015 in terms of estimated HMV spending, accounting for more than $190 million for the next year. This is just ahead of the $185 million projected for the McDonnell Douglas MD-11, with 143 aircraft, mostly in cargo service, operating worldwide. The 747 will jump into first place in terms of spending by 2015, with over $260 million.

For C checks, the A330 leads the C market, in terms of number of visits, with an average of 425 annual visits. The 767 holds second place over the next three years, with an average of 330 per year. The 777 will hold a consistent third place, averaging 262 yearly. In terms of spending, the 767 will be the C check leader, even though the amount of money spent will decline in each of the next three 12-month periods, from more than $240 million in 2013 to under $200 million in 2015, for about a 15% drop.

The 747 and the A330 jockey for second place in C check spending, with the A330 coming in behind the first-place 767 in 2015, with expenditures of about $164 million. Operators of the 747 C check will spend more than $215 million in the next year, dropping to $185 and $145 million for years 2014 and 2015.

By 2014-15, the Boeing 787 will start to require its first C checks, with a projected spend of about $310 million.

Cargo giant FedEx will be the big market-mover in widebodied aircraft major checks, with its mixed fleet totaling nearly 250 aircraft in service. Expectations are that the carrier will generate 45 HMVs and 121 C checks, on average, over the next 36 months, leading all other operators in both categories.

FedEx will spend an estimated $163 million on HMV checks over the next 12 months; $156 million for the subsequent 13-24 months, and about $105 million in months 25-36. The carrier's C check spending is predicted to be $76 million—$72 million for the first and second 12-month periods, respectively. This is predicted to increase to $76 million for the final 25-36 months. Those numbers will assure FedEx's position as a leading buyer of widebody maintenance services over the forecast period.

Looking at the Aviation Week numbers in aggregate, operators of the global widebody airline fleet of nearly 4,000 aircraft should spend about $1 billion per year on HMVs from 2013-15.

Asia-Pacific airlines operate more than 1,200 widebodies, compared to nearly 1,100 operating in North America and over 800 in Europe's fleet. Middle Eastern airlines fly nearly 600 widebodies. Airlines in Africa only fly about 120 widebodies and 100 are based in the Latin American/Caribbean region.

Focusing on the number of HMV checks, North American operators will account for the majority for the next two years, with about 170 annually, but by 2015, will drop into third place behind Asia and Europe, with approximately 130. Asia-Pacific, in fact, shows steady growth with 120 and 150 HMV checks annually—in 2013 and 2014—jumping into first place by 2015 with over 190. Europe's HMV trajectory will grow about 30% over the three-year period.

Perhaps a reflection of their lower labor costs, the Asian carriers will be in third place throughout the 36-month period in terms of HMV expenditures, although that will increase from about $180 million in 2013 to $290 million, or about 40%, by 2015. North America's HMV spending share for the period, however, is expected to decline. Europe, on the other hand, works itself into first place by spending $375 million on HMVs by 2015, which is a gain of 35% over the figure estimated for 2013.

Expect to see sizeable spending increases from Latin America/Caribbean operators, whose share of widebody HMV spending will more than double over the next three years to $15 million from $7 million. Likewise, African operators are expected to generate $20 million in HMV business next year, but increase that figure by 30% in 2015.

The largest number of widebody aircraft, in descending order, are based in the U.S., United Arab Emirates (UAE), China, England, Hong Kong, France, Germany, Japan, South Korea and Singapore. Consequently, most of the business for HMVs in terms of visits and money spent will come from these countries. For instance, the U.S. will average 160 HMV visits per year over the next 24 months, but drop to about 120 in 2-3 years. This will decrease U.S. HMV spending by 30%.

China, with a widebody fleet of 225, will average about 40 annual HMVs for the next three years, putting it in second place, although it will rank third in spending. For China, HMV spending shows year-over-year increases from $37 million over the next 12 months, to about $75 million in 2015.

UAE widebody HMV spending is estimated at $27 million, rising to over $63 million within three years, for a gain of about 130%.

Compared with the HMV market opportunities, widebody C check spending will drop from $960 million over the next 12 months to just $800 million in 2015. That comes as no surprise, given that the high point of C checks will take place in 2013 with about 1,800, and decline by 11-12% to just over 1,600 in 2015.

North America, Europe and Asia will generate the highest C check widebody expenditures in the forecast period, but the numbers are dropping in each region. This is partly attributable to longer C check intervals. The North American carriers will spend about $300 million in 2013, while European carriers will generate about $270 million in widebody C check business.

Asia's share also will decline over the next 36 months, with $210 million in 2013, but just $190 million three years later. Another example of a significant decline in C check spending is the Middle East sector, which will account for about $130 million in 2013, but under $100 million by 2015.

The U.S. will be the most lucrative market for C checks over the coming three years, with the largest number of airframes, and the most money spent. For the next 36 months, annual C checks are projected to be about 450, although as with the HMVs, the U.S. carriers will spend progressively less. In that regard, the estimate is about $273 million over the next 12 months, $264 million in the following 12, and $251 million in the remaining 12, for almost a 10% decrease.

The UAE will be the second-largest C check market, at least with respect to visits, for most of the next three years, specifically over the next 12 months, and the last 25-36 months, with China taking second place during the 13-24-month period. However, C check visits from the UAE, projected for almost 110 in 2013, will fall to about 90 in 2015. That will result in a spending drop of about 20% to $35 million in 2015, down from the nearly $44 million projected during 2013. This ranks third in spending behind the U.S. and England, which is also expected to show decreasing spending on C checks.

In fact, British carriers, expected to make nearly 100 C check visits in 2013, will have about half that number over the next 36 months. That group is expected to contract for $78 million in C checks over the next 12 months; $52 million for the subsequent 13-24 months, and $43 million for the final 12 month period, for about a 45% reduction.